<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221114111128/637218549c7e80680e0baa37jpeg.jpg" alt="" width="664" height="450"/><figcaption></figcaption></figure>The crisis that is consuming Sri Lanka has sent warning bells ringing in Nepal. While sensational media headlines, some of them in the Indian press, have drawn too close a comparison between the two countries, there are parallels.Nepal does not have the kind of debt burden that has forced Sri Lanka to default on its loans. Ironically, it is Nepal’s underdevelopment that cushions it from global upheavals. Politics may be in disarray here too, but at least we do not have an executive president, a prime minister and three other brothers who are ministers in government.Nepal’s disease may not be as severe as Sri Lanka, but <a href="https://archive.nepalitimes.com/article/editorial/A-tale-of-Nepal-and-Sri-Lanka,1086" target="_blank" rel="noopener noreferrer">the symptoms are the same</a>.For decades, Sri Lanka was the development model that the rest of South Asia strived to emulate. Its 95% literacy, equitable health care, a proficient bureaucracy were the envy of the developing world.But even a well-educated public and effective social security system stand no chance against bad leadership, and can wreck a once-vibrant democracy. The rot in Sri Lanka started as far back as 1956, with ultra-nationalist leaders building vote banks with exclusionary ethnic politics.Read also: <a href="https://www.nepalitimes.com/latest/asias-new-cold-war/">Asia’s new Cold War</a>, Dhirendra NalboThe grievances of the minority community piled up, erupting in the anti-Tamil pogroms of 1983, and the inevitable slide to conflict. At one point in the late 1990s, a country half the size of Nepal and with two-thirds of its population had two <a href="http://archive.nepalitimes.com/news.php?id=9345#.YoMV3RRBxpQ" target="_blank" rel="noopener noreferrer">civil wars raging</a> at the same time: the ethno-separatist conflict in the north, and <a href="http://archive.nepalitimes.com/news.php?id=507#.YoMUpxRBxpQ" target="_blank" rel="noopener noreferrer">the ultra-Marxist JVP</a> uprising in the south.The JVP insurgency was crushed, but by the time <a href="http://archive.nepalitimes.com/news.php?id=15978#.YoMV8xRBxpQ" target="_blank" rel="noopener noreferrer">the Tamil war</a> came to a violent end in 2009 nearly 100,000 Sri Lankans had been killed. In comparison, Nepal’s Maoists insurgency lasted a decade and left 17,000 dead.The precursors of Sri Lanka’s current crisis lie in post-war politics and the rise and fall, and rise again, of the Rajapaksa family, its greed, ambition and <a href="http://archive.nepalitimes.com/regular-columns/Here-We-Go/here-we-go-silenced-by-state-sri-lanka,182" target="_blank" rel="noopener noreferrer">drift towards authoritarianism</a>. Sri Lanka’s thriving tourist industry was destroyed in the deadly Easter bombings in 2019, and the pandemic wiped out what remained. Exports and remittances from its workers abroad slumped.In addition, the Mahinda Rajapaksa in his previous stint had borrowed extravagantly from China for grandiose infrastructure projects, and the Chinese were demanding their pound of flesh.Another Rajapaksa brother as agriculture minister decreed overnight that Sri Lanka would go organic, and banned the import of agro-chemicals. Tea export and food production fell.The <a href="https://www.nepalitimes.com/here-now/ukraine-crisis-hits-nepal-economy-hard/" target="_blank" rel="noopener noreferrer">Ukraine crisis</a> could not have hit at a worse time. Fuel prices doubled in a space of weeks, and Sri Lanka had no foreign exchange reserve to pay for imports. Faced with a 40% inflation rate, <a href="https://www.nepalitimes.com/latest/the-geopolitics-of-food/" target="_blank" rel="noopener noreferrer">a crippling shortage of food</a>, cooking gas and fuel, peaceful protesters were camped out in central Colombo.Then, on 9 May the Rajapaksa brothers sent hired goons to drive out demonstrators from Colombo’s seafront promenade. The police stood by, and visuals of violence went viral on social media. Nine people were killed and scores injured as protests spread nationwide.Prime Minister Mahinda Rajapaksa stepped down, and his much-reviled brother President Gotabaya Rajapaksa swore in Ranil Wickremasinghe as prime minister for the sixth time, beating a record set by our own Sher Bahadur Deuba.This could be too little too late. As long as the Rajapaksas cling to power, Sri Lankans fear that the nepotism, corruption, and mismanagement will continue.The coming weeks are critical for Prime Minister Wickremasinghe, and he himself admits that things will “get worse before they get better”.Sri Lanka is an object lesson for us in Nepal about how <a href="https://www.nepalitimes.com/here-now/clean-up-elections-to-clean-up-politics/" target="_blank" rel="noopener noreferrer">short-sighted leaders</a>, populism, and lack of accountability of elected despots and their dynasties can completely ruin a country that was once so full of promise.Crises like these do not just happen overnight, they are the result of decades of mal-governance by leaders who neglect the needs of citizens. Democracy is supposed to fix that, but this is what happens when leaders hijack the democratic process itself.Nepal has a unique opportunity during <a href="https://www.nepalitimes.com/latest/turning-a-new-leaf-in-2079/">this election year</a> to find leaders that can take the country forward. That so many independent candidates have won <a href="https://www.nepalitimes.com/banner/nepals-local-election-gives-power-back-to-people/" target="_blank" rel="noopener noreferrer">local elections</a> this week should be a wake-up call for Nepal’s politicians to mend their ways or be swept away by public anger.

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How not to be a Sri Lanka

<figure><img width="1500" height="1000" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221110161132/636d19959c7e80680e0ac828jpeg.jpg" alt=""/><figcaption>Photo: AMIT MACHAMASI</figcaption></figure>This short book, Political Economy of Social Change and Development in Nepal, by Jeevan Sharma, a senior lecturer on South Asia and international development at the University of Edinburgh, packs a punch. Drawing on his own original field research and the ideas of Karl Polanyi on The Great Transformation (1944) as well as secondary literature, Sharma has produced a holistic overview and analysis of the economic, social and political transformation that Nepal has experienced over recent decades. `His work challenges many of the prevailing characterisations and explanations of that process, and identify some of the contradictions that underlie the more visible fault lines that others like Ram Sharan Mahat and Baburam Bhattarai also have identified. In his Introduction Sharma writes that ‘change, transformation and development have been recurrent themes, not only in everyday conversations, political rhetoric and social movements, but also in Nepali public culture and literary writings since the 1950s’. He then reviews both the main features of the changes that have taken place since the 1950s and also some of the different theoretical and empirical studies that have addressed those changes. Sharma warns against the uncritical adoption of Polanyi’s framework for ‘the Global South’, but argues that a more complex model, involving ‘a three-sided constellation of conflict among proponents of marketisation, adherents of social protection and partisans of emancipation’, would make it possible to connect ‘politics, society and economy’. He does not consider in any detail alternative approaches to the ‘political economy’ of social change and development in Nepal (eg the ‘neo-liberal’ and the Marxist) although he sees the ten-year <a href="http://archive.nepalitimes.com/blogs/thebrief/2015/02/16/making-war-on-the-day-of-love/" target="_blank" rel="noopener noreferrer">Maoist insurgency</a> (1996-2006) as part of a broader movement for social justice, rights and citizenship that he argues has been developing ‘since the 1950s’. The book has four main chapters, each considering an axis of change. Chapter 2 ‘From Subjects to Citizens’ considers Nepal’s political ‘transition’ focuses particularly on the period since the 1950s. The first half of the chapter charts the uneven process the transition from subjects to citizens at the national level, the second half examines local perceptions of the dynamics of social change with particular reference to changes in caste, gender and local power relations and to the role of the Maoist insurgency in bringing about these changes. This section draws on Sharma’s own fieldwork in western Nepal. Chapter 3 ‘Peasantry, Mobility and the Changing Face of Rural Nepal’ looks briefly at the economic and social history of the peasantry in Nepal and ‘changing rural society’, exploring the diversification of rural livelihoods, the weakening of ‘caste-based feudal relations’ and the commodification of labour. This leads on to a consideration of <a href="https://www.nepalitimes.com/opinion/nepali-migration-in-the-2020s/" target="_blank" rel="noopener noreferrer">migration</a>, which he rightly sees as having a long history from the mid-18th century onwards. Somewhat controversially, Sharma identifies three to five ‘waves’ of migration, the last of which became more widespread after the 1990s and ‘has come to shape the nature of the remittance-based national economy of Nepal’ – leaving many Nepalis in low-paid, highly exploitative and precarious employment. I would have preferred to see migration as characterised by different ‘forms’ or ‘regimes’, often contemporaneous rather than sequential. And despite the undoubted importance of remittances in contemporary Nepal would contest the notion that Nepal’s economy is ‘remittance-based’. There are many different strands in Nepal’s complex integration in the wider regional and global economy, including not only the export of labour, but also of other resources as commodities, and the importation of commodities from other countries, foreign direct investment, loans and ‘<a href="http://archive.nepalitimes.com/news.php?id=19592#.YXet2E1BzOQ" target="_blank" rel="noopener noreferrer">foreign aid</a>’. It is also debatable, as the climate crisis deepens in this most vulnerable of countries, whether paid employment away from home is necessarily more precarious than livelihoods based on <a href="https://www.nepalitimes.com/latest/aid-rarely-aids-agriculture-in-nepal/" target="_blank" rel="noopener noreferrer">agriculture</a> and embedded in a local economy and society often characterised by hierarchy and inequality.   Chapter 4 ‘Mobility and Educational and Occupational Futures’ focuses on the experiences of young men from rural Nepal as they struggle to overcome the challenges of mobility and find secure, and salaried employment. It draws heavily on Sharma’s fieldwork in Palpa and explores ‘social meanings and patterns of mobility’, looking at the links between education and employment in particular, but also considering the significance of caste and ethnic identities in determining outcomes. This chapter is particularly rich in ethnographic terms, and complements Sharma’s earlier work on ‘youth, migration and masculinities in Nepal’. It would be good if some anthropologist were to undertake a similar investigation into the education and subsequent livelihoods of girls and women. Chapter 5 ‘Development and Patronage Politics’, while referring to programs undertaken during the early 20th century ‘that would fall under what is broadly regarded as development’, Sharma sees 1950 as ‘a critical moment in Nepal’s development history’. He examines briefly what he calls the ‘initial rush for development’ in the 1950s and then the program of ‘nation-building through Bikas’ under the Panchayat System dominated by King Mahendra. This is followed by a review of the period after the first Jana Andolan from 1990 to 1996 (‘democratisation for development’) and of the Maoist insurgency (‘conflict and development’) from 1996-2006. Sharma considers the Maoists’ theory, strategy and practical contribution to economic, social and political change. While recognising that ‘development was at the core of Maoist ideology and strategy’ and acknowledging their positive influence in certain areas – notably addressing inequality and social discrimination – he seems largely unimpressed by their actual achievements and has a number of negative things to say about their practice. Somewhat surprisingly, he does not refer in any detail to their theoretical and political analysis of development and underdevelopment, despite several of the Maoist leadership publishing them widely. He notes, however, that the Maoist insurgency prompted various development agencies to reconsider their own strategy for addressing ‘<a href="https://www.nepalitimes.com/editorial/end-of-war-is-not-peace/" target="_blank" rel="noopener noreferrer">structural violence</a> and discrimination’ – resulting in the establishment of a new consensus on the priority on gender, caste and ethnicity through the lens of  inclusion and empowerment. This effectively downgraded the concerns of economic (class) inequality, and poverty, which had hitherto been a main concern of both the World Bank and the UK Department for International Development (DfID). He also remarks that the conflict itself had the effect of accelerating the process of migration, both temporary and permanent, from the rural areas to the towns and abroad, thereby contributing to the transformation of both rural and urban economy and society. ‘The Maoist insurgency coincided with a major economic change in Nepal, that is, the commodification of land and labour as never before, with the deepening of the market in the citizens’ everyday lives,’ he writes. This process continued in the next period, following <a href="https://archive.nepalitimes.com/article/nation/revisiting-maoist-demands,2860" target="_blank" rel="noopener noreferrer">Jana Andolan II</a> and the <a href="http://archive.nepalitimes.com/news.php?id=12806#.YXetRU1BzOR" target="_blank" rel="noopener noreferrer">Comprehensive Peace Agreement</a> (CPA) of 2006, as the Maoists re-entered the mainstream of Nepali politics and contributed to the peace process and state re-structuring. This led to the establishment of an interim government, the abolition of the monarchy, and the election of a Constituent Assembly charged with the task of drawing up a new constitution, for a secular, federal republic. The excitement of the early years of this period (2006-2008) was followed by seven years of political wrangling and lack of direction until, eventually, shortly after the April-May 2015 earthquake, a new Constitution was finally promulgated in September. This was marked by controversy, and <a href="https://www.nepalitimes.com/banner/few-jobs-created-by-nepal-employment-drive/" target="_blank" rel="noopener noreferrer">failed to advance</a> any of the promising elements of the <a href="https://www.nepalitimes.com/opinion/justice-in-transition/" target="_blank" rel="noopener noreferrer">CPA</a>, including Article 3.13. which envisaged ‘a policy of massive increase in employment and income generation opportunities by increasing investment in industries, trade and export promotion’. Sharma argues that ‘sluggish economic growth and <a href="https://www.nepalitimes.com/banner/missing-the-plot-in-nepals-job-scheme/" target="_blank" rel="noopener noreferrer">lack of jobs</a> have created economic precarity’, and that while demands for greater rights for various social minorities have tended to take centre stage, there has been little or no appetite on the part of government or opposition, development agencies or civil society, for economic justice.  Sharma argues that ‘beyond the immediate impact on the economy and lives and livelihoods, the earthquake had a seismic impact on Nepal’s long political transition’.  I would disagree. Although it resulted in the ‘fast-tracking of the Constitution-writing process’, the earthquake failed to promote a new sense of common endeavour or urgency, even as regards physical reconstruction after the earthquake. The interventions of the foreign agencies in its aftermath were un-coordinated and subject to widespread criticism. Controversies over aspects of the <a href="https://www.nepalitimes.com/latest/nepals-contentious-constitution-day/" target="_blank" rel="noopener noreferrer">Constitution</a> and the very different responses to it from China and India, provided fuel for a ‘new Nepali nationalism’, as Sharma suggests – even if this nationalism proved divisive rather than integrative. This period was marked on the one hand by a national debate over the precise form the promised new ‘federal’ structure would take, and efforts to delineate the contours of a new, more decentralised polity, while on the other hand, political discourse and practice continued to be characterised by the dominance of elite politics at all levels, national, regional and local, and by the pervasive and malign phenomenon of corruption and patronage. Sharma ends this chapter by remarking that ‘the politics of the distribution of development has been realised in practice by distributional coalitions’. In other words, development in Nepal is not the broad-based, inclusive form of positive economic, social and political transformation that the term often implies, but rather a narrowly conceived and implemented, and fragmented, ‘sharing of the spoils’. The book ends with a consideration of ‘Precarity and Paradox in Once-Remote Locations’, on the contradictions of globalisation for a social formation on the periphery of the global political economy that retains many of the characteristics of pre-capitalism. It also looks into the nature of life on the periphery – which involves integration in the global political economy but creates ‘precarious livelihoods’. Sharma is concerned that Nepal’s integration into the wider world has so far failed to generate the appropriate ‘counter-movement’ to safeguard and protect the lives and livelihoods of the majority of ordinary Nepalis, even if it has <a href="https://www.nepalitimes.com/banner/nepals-great-income-divide/" target="_blank" rel="noopener noreferrer">apparently reduced poverty</a>, allowed the emergence of a middle class, and enabled <a href="https://www.nepalitimes.com/here-now/nepals-richest-man-in-the-pandora-papers/" target="_blank" rel="noopener noreferrer">a minority to accumulate considerable wealth</a>. Nepal’s continuing and arguably increasing reliance on foreign labour migration is both a cause and a consequence of the failure to generate decent, reasonably secure employment and economic opportunities within the country. It is a failure of both the public and the private sector, but it is also a consequence of the lack of an enduring movement for economic, social and political reform (or revolution) to bring about a ‘great transformation’ in Nepal. David Seddon is a former Professor of Development Studies at the University of East Anglia and now independent researcher and writer.Political Economy of Social Change and Development in NepalJeevan R. SharmaBloomsbury Academic India, 2021215 pp.<img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221110161132/636d19989c7e80680e0ac829jpeg.jpg" alt="" width="180" height="291">

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Nepal’s elusive ‘Great Transformation’

It was 30 years ago this month that investment into ‘Baby Arun’, the 201MW first phase of the run-of-river Arun III project, was brought to a screeching halt when the World Bank officially withdrew its support. This brought about profound and fundamental changes in the way Nepal’s power sector subsequently developed. Nepalis suffered debilitating power outages between 2008-2016 due to shortages attributable to the cancellation. At the same time, the gap left by Baby Arun was filled by private sector investment in ways that were not obvious in 1995. It took 30 years, but in many ways Nepal’s power sector is more healthy today than it has ever been, and likely better than if the project was built as planned. At a projected budget of $1.08 billion, Baby Arun would have cost the equivalent of Nepal’s entire annual government expenditure in 1995. It was to be funded by concessional grants and loans from multilateral and bilateral funders, including the World Bank, Asian Development Bank (ADB), KfW, and investment by the government itself. At the time, Nepal’s total electricity generation capacity was only 230MW, and the trajectory of the power sector changed dramatically following the cancellation. In the past 30 years, $5.4 billion has been invested in the power sector led by private investors, and much of it from domestic banks and pension funds (table, right).  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250829150840_c13d6f9f34d7163832b3089eabdad6f20d2d5cef3a53039e0432add2be6c32f0.jpg" data-media-id="editor_0" data-image-id="20250829150840_c13d6f9f34d7163832b3089eabdad6f20d2d5cef3a53039e0432add2be6c32f0" data-rendition-name="original" width="984" height="521" loading="lazy" alt="30 years after Baby Arun"> </figure>  Nearly 70% of the new megawatts generated were by private independent power producers (IPP) in the past 30 years, while the Nepal Electricity Authority (NEA) and its subsidiary companies added 30% of new capacity. Almost 80% of total debt financing came from domestic banks and employee retirement funds. International assistance for power generation dropped dramatically over this time, accounting for only about 15% of investment. Before 1995 new power projects used to be entirely dependent on foreign aid. Since 1995, 63% of new generation came from 171 small hydropower projects with an average capacity of 12MW, while 4% was from 21 solar photovoltaic and biomass projects developed by local IPPs.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250829150844_5bc299fc78be90b95ce4727b0b3bdaa4542e17e126718cc8725d136630ffc097.jpg" data-media-id="editor_1" data-image-id="20250829150844_5bc299fc78be90b95ce4727b0b3bdaa4542e17e126718cc8725d136630ffc097" data-rendition-name="original" width="988" height="503" loading="lazy" alt="30 years after Baby Arun"> </figure>  Over three decades, investment in Nepal’s power supply came primarily from new actors that had never before been involved in this sector. The rate of electrification rose from 10% to close to 100% -- sufficient to meet domestic needs during most of the year, and in 2024 made Nepal a net exporter of power to India for the first time in its history. As practically all the new investment in this period went into run-of-river hydro and solar projects, rather than into hydropower reservoirs with seasonal storage, Nepal continues to rely on imports from India during the dry winter months. Surplus electricity generation for export during the monsoon is slated to grow rapidly as another 200 solar and hydro projects are nearing completion of construction, with over 5,000MW of power capacity. Private Power The cancellation of Baby Arun inadvertently accelerated the entry of the private sector into Nepal’s power generation. The government enacted the Electricity Act in 1992 to attract private IPPs and diversify away from total dependence from international aid, but had been struggling for several years to conclude the first agreement with the 60MW Khimti Project. There remained a large gap between the tariff that the government thought was reasonable versus what was demanded by the Norwegian investor Statkraft, and the private sector arms of the World Bank and ADB that were financing the project. The shock of World Bank withdrawal from Baby Arun put tremendous pressure on the government, then led by the UML as it is now. The Bank’s decision to terminate its involvement was ostensibly, at least partially, taken in response to a letter critiquing the project sent by the UML while it was in the opposition.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250829150848_7fb3641d776fe86a09ad60a758f7e16660a409fdb15e541644f13646b0894347.jpg" data-media-id="editor_2" data-image-id="20250829150848_7fb3641d776fe86a09ad60a758f7e16660a409fdb15e541644f13646b0894347" data-rendition-name="original" width="949" height="446" loading="lazy" alt="30 years after Baby Arun"> <figcaption>BAD NEWS: Newspaper clippings from the early 90s on tender announcement ahead of loan approval (left) and secrecy surrounding environmental assessment (centre) of Arun III before its eventual cancellation in August 1995.</figcaption> </figure>  The government was forced to soften its position and agree to the investors’ terms following the cancellation of Baby Arun. It directed NEA to sign a power purchase agreement (PPA) with Khimti. It was concluded in January 1996, and this was followed by a second PPA in July 1996 with Panda Energy, the American developer of the 45MW Upper Bhotekosi project. The expensive USD-denominated agreements to buy power from two international private producers, with price escalation clauses tied to the New York Consumer Price Index, sent alarm bells ringing. There was worry that the country was heading towards unaffordable tariff rates for the consumer and potential bankruptcy for NEA as a result of inevitable future weakening of the Nepali Rupee. The government had strong-armed NEA into signing these agreements, and realised that concessionary financing terms that Nepal was used to receiving for public sector projects such as Baby Arun and Kali Gandaki A, that included below-market interest rates and 40 years repayment period with a 10 year grace period before starting repayment, were not the norm for private sector investors. Nepal’s status as a less than attractive destination for foreign investment meant that the country had few options but to accept expensive dollar PPAs from international developers with the high commercial interest rates and short repayment periods imposed by their banks because of high investment risks. In the end, the government ended up having to additionally provide a sovereign guarantee in order to close the deal at the insistence of the lenders – committing it to repayment in case NEA defaulted on paying the IPPs. It is reasonable to assume that the extraordinarily high political cost of agreeing to the PPA terms would have meant that no government would have willingly agreed to them in 1995 had it not suffered the trauma of the loss of concessionary-financed public sector projects as large as the Baby Arun. It has taken NEA 25 years to consider offering dollar-denominated PPAs again: to cover the foreign exchange portion of the investment in the 216MW Upper Trisuli-1 and 120MW Rasuwa-Bhotekosi Hydropower projects. It seemed unlikely at the time, but it turned out that the dire situation Nepal found itself in 1995 planted the seed to mobilise investment for affordable power from within the country. Double Whammy After the dual shock of first losing investment in Baby Arun and having to sign expensive power purchase agreements with international IPPs, the first proposal for an alternative strategy to mitigate the risk of foreign currency investment into hydropower projects came from a group of engineers within the Arun III team at NEA. Led by <a href="https://archive.nepalitimes.com/news.php?id=4900">Deputy Director Damber Bahadur Nepali,</a> engineers convinced the leadership that NEA needed to invest in a subsidiary company to build a series of locally-designed and domestically-financed projects that would have lower cost with rupee-denominated PPAs. They registered the Chilime Hydropower Company Limited (CHCL) in October 1995 with 51% shares from NEA, 25% from its employees, and 24% available for the general public, 10% of which was prioritised for local residents at the project site. The 22.1MW project is in Rasuwa on a tributary of the Trisuli, and mobilised debt financing from the Employee Provident Fund, which manages retirement savings for employees of the government, public enterprises, and private sector institutions. CHCL’s experience showed that NEA employees themselves believed that individual hydropower projects with operational independence from NEA could be developed profitably in Nepal by its own engineers -- and they were willing to put their own money on the line. Chilime also demonstrated that there was money in the country, particularly with retirement funds, looking for opportunities for long-term investments. Following completion of Chilime in 2003, CHCL led the formation of three other NEA subsidiary companies that completed construction in 2023 and 2024, producing 168.3MW using fully rupee-tied investment. NEA’s largest subsidiary, the Upper Tamakosi Hydropower Limited, completed construction of its 456MW plant in 2021.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250829160812_ce9ab8b49c598970db3f5bf0a079061ef52f153b28d9f4ead2bb1b26bfd7c2f3.jpg" data-media-id="editor_4" data-image-id="20250829160812_ce9ab8b49c598970db3f5bf0a079061ef52f153b28d9f4ead2bb1b26bfd7c2f3" data-rendition-name="original" width="3000" height="1571" loading="lazy" alt="30 Years after Baby Arun"> <figcaption>DAMNED: The $700 million 456MW Upper Tamakosi built entirely with domestic funds before it was destroyed by the September floods last year. </figcaption> </figure>  There were some delays and cost overruns on this run-of-river project, the largest in the country with a final cost of over $700 million -- all of it sourced domestically. The five subsidiary companies launched by NEA have produced almost two times as much new power as NEA has over the past 30 years. Seven other NEA subsidiaries are currently constructing projects to add another 474MW to the national grid. But even more important than NEA subsidiaries have been local IPPs: Nepali companies which have over the past three decades enthusiastically entered the hydropower sector. From a regulatory perspective, the credit for mobilising domestic private investment to engage in power generation goes to Minister of Water Resources Shailaja Acharya, who in 1998 offered a flat feed-in-tariff of Rs4/kWh for hydropower projects under 10MW. This upfront offer removed a major barrier that early developers had faced of having to spend money to carry out a detailed feasibility study before they could even start tariff negotiations with NEA. She had laid the foundation stone of the Chilime project, and proved to be the champion of opening up the sector for domestic IPPs. The guarantee of a PPA with a fixed tariff, irrespective of project specifications, gave small power developers the confidence to apply for survey licenses and invest in feasibility studies so they could directly approach commercial banks and make a case for their project producing required revenue to repay loans. Domestic IPPs started adding power to the national grid in 2002. Their contribution was initially modest, and first projects were small and commercial lenders who took time to be confident about providing debt financing to a sector which had previously not been considered suitable for private sector investment. While the first 10 years were slow, with less than 10MW being added to the grid each year, this increased twenty fold over the following ten years, resulting in the equivalent of a Baby Arun being added by Nepali IPPs to the grid each year. A total of 84 IPPs added 232MW, 328 MW, 454MW, and 400MW of new generation to the grid in 2021-2024 (graph). There was explosive, exponential growth as domestic developers have surged ahead to account for 76% of the new megawatts added to the grid since 2020, compared to 24% by NEA and its subsidiary companies. The megawatts that IPPs are adding have followed the classic ‘hockey stick curve’ with the ‘breakout point’, signaling the rapid growth phase in 2020. Private producers are expected to accelerate new generation in the coming years with 300 solar and hydropower projects adding 11,000MW. Another 166 hydropower and 96 solar projects are currently in the survey stage, and are in line to add another 11,000MW to the construction pipeline. One major challenge is finding financing required for the projects. Domestic investment will no longer be sufficient to finance this ambitious pipeline of renewable energy projects. Project developers as well as NEA and the Electricity Regulatory Commission will have to leverage their substantial experience accumulated through the construction of over 200 projects to attract regional and international investment and hedge the risks of dollar-denominated PPAs. Following the cancellation of Baby Arun, <a href="https://nepalitimes.com/opinion/people-power/decentralising-power-in-nepal">Nepal developed a highly distributed power sector</a>. The national electricity grid is currently supplied with power from a remarkably decentralised array of hundreds of hydropower and solar photovoltaic projects spread across 43 districts and all seven provinces.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250829150848_0c3aa66b34bfb08380a624f397bf3ebb4126f4d6b41a26115848b496876f501b.jpg" data-media-id="editor_6" data-image-id="20250829150848_0c3aa66b34bfb08380a624f397bf3ebb4126f4d6b41a26115848b496876f501b" data-rendition-name="original" width="1228" height="867" loading="lazy" alt="30 years after Baby Arun"> </figure>  This presents a sharp contrast to the pathway of a few large public sector hydropower projects with a sprinkling of private sector projects that was envisioned as part of NEA’s investment planning when Baby Arun was being considered the front runner for investment. The strategy then was to allow public sector investment in a few large hydropower projects with thermal plants to fill the gap. Knowing what we know now about acceleration of climate change impacts and increased extreme weather events, following this path would have made Nepal’s power sector highly vulnerable. Decentralised generation greatly improves the resilience of Nepal’s power supply as damage to power plants in one part of the country need not affect other areas that have their own generation. Following the investment plan where over two thirds of the country’s power supply would have come from power plants on the Arun River, would have greatly imperiled Nepal’s energy security. All rivers in Nepal are susceptible to flooding from cloudbursts made more frequent by climate change. The Arun River which is fed by glaciers in Tibet is also at risk to glacial lake outburst floods. Bikash Pandey is Director of Clean Energy and Circular Economy at Winrock International. People Power is his regular column in Nepali Times on global energy issues relevant to Nepal. <h2>Decentralised and Diversified</h2> In the 30 years since the cancellation of ‘Baby Arun’: Hydropower projects constructed cover capacities ranging from less than 1MW to 456MW and developed by IPPs from across the country with strong local involvement in purchasing equity shares. Renewable energy sources contributed to the generation mix through solar IPPs that further contribute to climate resilience, and cover shortfalls during low rainfall. The government is committed to solar contributing 10% of the power on the grid. Increasing solar beyond this target and providing incentives to project developers to invest in utility-scale battery storage would further improve resilience. BIG ARUN: The 900MW Arun III project under construction since 2018 at Num in Sankhuwasabha (pictured, below) is a separate initiative by a different project developer using a different financing modality. The ‘Baby Arun’ version of Arun III was cancelled in 1995.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250829150852_df534df5166eb5a9bb4cbe101627bdec7ac1df2a405a9d3988d1c86fcc8ecdeb.jpg" data-media-id="editor_7" data-image-id="20250829150852_df534df5166eb5a9bb4cbe101627bdec7ac1df2a405a9d3988d1c86fcc8ecdeb" data-rendition-name="original" width="1750" height="1312" loading="lazy" alt="30 Years after Baby Arun"> </figure>

30 years after Baby Arun

This is the 72nd episode of Diaspora Diaries, a Nepali Times series in collaboration with Migration Lab providing a platform to share experiences of living, working and studying abroad. My father ran a store and that is where I spent all my time till Grade 6. Doing my homework. Serving customers. I then moved to my maternal grandparents’ house because I used to get along with my cousin who was a year older than me. We did everything together, and were best friends. We took turns studying: I was a night owl, and he was an early riser. Before I went to bed after studying all night, I woke him up. My mother was 44 when I was born, the same year my eldest brother got married. My sister-in-law becoming a part of our family was how my mother referenced my age. I liked making money, and was always a hustler. In Grade 7, I learnt to handle a tractor and helped my brother-in-law to plough, earning Rs10 a day. As I got better, he paid me more. By Grade 9, I was already making Rs500 per day, but had to slow down to prepare for my exams. From an early age I knew I did not want a 9-5 job. There just wasn’t enough money in it. I wanted to get into business, and compared my brother who worked in the post office and what businessmen made. It did not help that my brother was honest, and never took bribes. A friend and I made money selling cheap Chinese phones at a premium to our friends. We blasted music on the phones and pretended that we were giving them a discount. After SLC, I started teaching math and other subjects. I was soon a shareholder in the same school and in the evening I was involved in our family’s floriculture business, growing amaranth and marigold for garlands.&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250831020844_1b54b999d67122a50c4c7e6204cc737bcc99bf2a68db6499a4566a7f61a880b4.jpg" data-media-id="editor_0" data-image-id="20250831020844_1b54b999d67122a50c4c7e6204cc737bcc99bf2a68db6499a4566a7f61a880b4" data-rendition-name="original" width="955" height="1314" loading="lazy" alt="Diaspora Diaries 72"> </figure>  It was then that a friend suggested we learn the Korean language. We could be earning significantly higher in Korea for similar efforts. I had no plans to go abroad but he convinced me. I did not know anything about Korea, and was scolded at the language institute when I asked someone to point Korea on the map.&nbsp; It was only there that I learnt you had to pass an exam for the Korean Employment Permit System (EPS), and pay for language classes. After a week, I decided it was not for me and dropped out. But my friend convinced me to give it one more try. I did not prepare much for the exam, and it was no surprise that I failed. But it was just by one mark, and people would pity me for failing “just by one mark”. It was a brand of failure. It hurt my ego. I had to turn things around by taking the exams seriously, and locked myself up to study hard.&nbsp; Even when we had visitors, my wife told them I was not home. If I was not in my room learning Korean, I would be with a group of ten of us test-takers comparing notes and practicing late into the night. The exam was difficult, but this time I passed, the only one in my group who did.&nbsp; As someone who never liked the idea of doing a job, I still had my doubts about going to Korea. It did not help that one of my acquaintances had returned a month after he had left, and he discouraged me from migrating given that I was already making good money in Nepal.&nbsp; But my wife suggested that I give it a shot since I had worked so hard for it. And if it really turned out not to be my cup of tea, I could always return. What did I have to lose, I thought, at least I would get to visit Korea. My job there was in an electrical company that made circuit boards. I worked all day, earned good money. In the evenings, I kept myself busy with my real estate business back in Nepal. I had learnt the tricks of the trade from fellow real estate agents back home, but at the time did not have the capital to invest.&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250831020848_941e961e2045058f255ad89884b51faa7d2365c68236e5cbe573d63d769ac6c5.jpg" data-media-id="editor_1" data-image-id="20250831020848_941e961e2045058f255ad89884b51faa7d2365c68236e5cbe573d63d769ac6c5" data-rendition-name="original" width="1500" height="1000" loading="lazy" alt="Diaspora Diaries 72"> </figure>  In Korea, it helped that I had salary records that allowed me to get loans from financial institutions both in Korea and in Nepal. Ultimately, I started earning more from my real estate deals in Nepal than from my job in Korea. This was all thanks to my ability to take loans because of the EPS scheme. My wife has been managing the flower business while I was away. My finances grew stronger over the eight years I was in Korea. I paid off the loans that I had borrowed to buy land. But real estate did not satisfy me entirely. I wondered: what is my brand? What will I be known for? What is my contribution to society? Real estate is for wealth, but that is about it. I needed to sell one piece of land and use the revenue to start a venture. I took classes in business, and returned to Nepal six months ago and got back to my family’s ancestral roots in floriculture. In Nepal too, I am continuing the entrepreneurship training I had started in Korea with the Bridge International. Such exposure helps us reflect on our business such as our branding, vision, and proactive aspects like the importance of strong recordkeeping.&nbsp; I am now working to upgrade and expand my floriculture business. With a friend who is still in Korea I am building a cooling room to increase the shelf-life of flowers and other produce and set up a market in my village where others can sell their produce. Floriculture is our primary business, but it is seasonal and earns good money only during festivals like Tihar.&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250831020848_a008ffeba13896e6918f68ff6e687c8fe11140d86a96f1ec11690547f2bcd415.jpg" data-media-id="editor_2" data-image-id="20250831020848_a008ffeba13896e6918f68ff6e687c8fe11140d86a96f1ec11690547f2bcd415" data-rendition-name="original" width="1280" height="720" loading="lazy" alt="Diaspora Diaries 72"> </figure>  So, I grow tomatoes to ensure year-round earnings. I also am engaged in other businesses like real estate and online shopping. I work round the clock in Nepal — a strong work ethic is something I picked up in Korea.&nbsp; My Korean bosses would work alongside us, that motivated us. I work just as hard in Nepal as I did in Korea. People here often ask me why I am pushing myself so hard. But making garlands comes easy to me, it is work my forebears were involved in. My childhood memories are about plucking flowers with my sister. I have a comparative advantage in this work. It comes naturally to me, it is easy and I enjoy it. And sometimes, if there are too many garlands to make, I can multitask while holding meetings. My fingers just fly. I am good at this job, but my wife is even better and faster.&nbsp; When there is too much load, we can also outsource the work. To be known as the flower guy would be great personal branding. The मखमली guy. Or the सयपत्री guy. I decided to come home for just this with a one-way ticket. “अब पासा: जाँदैन ल्हासा!” &nbsp;

The flower guy

It cannot be a coincidence that after pushing bills to constrict freedom of expression and allow greater <a href="https://nepalitimes.com/news/security-or-espionage">surveillance of citizens</a>, Nepal’s government is now tightening controls on civil society.
In a <a href="https://nepalitimes.com/opinion/guest-editorial/command-and-control">series of recent moves</a> journalists have been sued for contempt of court, imprisoned for YouTube videos, or ordered by courts to desist from investigating corrupt officials.
An amendment to the Print and Publications Act that would hand the power to shut online media to the Chief District Officer (CDO). Another draft Bill would allow a political appointee to head a new Media Council with the power to revoke a journalist’s license. The draft counter-intelligence Bill would let random officials to arbitrarily tap phones, read emails and trail citizens.
Now comes yet another draft Bill that would replace the <a href="https://archive.nepalitimes.com/news.php?id=10675">Social Welfare Council (SWC)</a> with direct government control over registration, regulation, and management of non-governmental organisations, nonprofits and charities. There are more than 54,000 NGOs, 200 international NGOs registered with the SWC.
The draft makes civil society organisations needlessly jump through hoops to carry out work that complements the government in the social sector. Critics say the Bill was drafted without any consultation with <a href="https://nepalitimes.com/opinion/comment/nepal-s-rights-groups-must-step-up-4r4z6ck4">civic groups</a>.
“This Bill’s content is questionable whether it intends to allow for civil society organisations in Nepal a free space to operate,” concludes Dr SP Kalaunee, Country Representative of BlinkNow Foundation and Chair of the Association of International NGOs in Nepal (AIN). “The draft seems oriented towards controling rather than facilitating the work of civil society organisations.”
The Bill will be open for feedback from the public, and integrates the National Directives Act (1961), Association Registration Act (1977), and the Social Welfare Act (1992) and proposes dissolving the SWC and replacing it with a new Social Welfare Department under the Ministry of Women, Children and Senior Citizens.
Non-government groups will now be required to get approval from the Registrar Office, the CDO or the provincial government depending on their area of operation. Those working across provinces will have to get permission from the federal government. &nbsp;
The government says the Bill is intended to vet organisations to see if they are engaged in espionage, violate national security, assist a foreign state, commit treason, cause strife between federal units, or incite communal violence.&nbsp;
CSOs working in Nepal have long called for legislation to better facilitate their work, minimise administrative and bureaucratic red tape which have posed operational challenges. But they are opposed to such drastic control.&nbsp;
Read also: <a href="https://nepalitimes.com/banner/the-crow-and-the-scarecrow">The crow and the scarecrow</a>, Om Astha Rai
The NGO Federation of Nepal also issued a statement this week calling the Bill ‘retrograde and cumbersome’. It added: ‘Most of its provisions are intended to further constrain and control civil society organisations rather than facilitate and strengthen them, and reduce the role of citizen participation … it is an attack on our civil liberties, inclusivity, and transparency, and curtails our <a href="https://archive.nepalitimes.com/news.php?id=5156">democratic values and constitutional rights</a>.’ &nbsp;
<a href="about:blank">Nepal’s graduation</a> from least-developed country status next year may mean less aid for Nepal, and higher interest rates on loans from multilateral creditors. The <a href="https://nepalitimes.com/news/how-usaid-cut-affects-nepal">closure of USAID </a>and reduction in bilateral grants means the work of INGOs will be even more vital – especially to meet its <a href="https://nepalitimes.com/here-now/target-2030-for-maternal-and-newborn-health">SDG targets by 2030</a>.&nbsp;
“We are competing with other countries at a time when the global aid environment is shrinking, so the support we receive is directly dependent on a conducive environment for INGOs to operate and function,” says Kalaunee. “INGOs follow regulations of the nations they operate in, they will not protest or wait around for governments to change their minds or policies.”
Social safety net
Since 1977, the work of non-governmental actors in Nepal has been regulated by the Social Service National Coordination Council (SSNCC) chaired by Queen Aishwarya.
After the <a href="https://nepalitimes.com/banner/one-moment-30-years-ago-today">1990 People’s Movement</a>, King Birendra set up the Social Welfare Council (SWC) as an autonomous body in 1992 through the Social Welfare Act. But since then the SWC has been dogged by controversy and allegations of corruption and extortion.
In 2018, the Commission for the Investigation of Abuse of Authority (CIAA) filed a Rs315 million corruption case against 14 individuals, including the Minister of Women, Children and Social Welfare and SWC chair Badri Prasad Neupane and other officials for violating public procurement laws to rent out three hectares of its property around Bhrikuti Mandap.
Civil society groups have for years called for reforms in the SWC, and a report was drawn up to restructure it before this Bill proposed its dissolution. INGOs in particular will now have to go through the Social Welfare Department and multiple ministries for permissions.
A particularly objectionable provision in the draft stipulates that NGOs must have a Board of Director made up almost entirely of secretaries of various ministries. The NGO Federation has urged the government to take a civil society-friendly approach and not tangle its work in red tape and control. It says the government has no option but to revise the bill in its current form.
“Civil society organisations need an open space to operate, and an autonomous body to oversee them,” says Kalaunee. “Non-government organisations support in the areas prioritised by the government but by definition they cannot be a part of government.”

Big, beautiful Bills

Nepal’s leaders often make grandiose promises that they will turn the country into Switzerland within a decade. We will be lucky if Nepal could even attain the per capita GDP of Swaziland.
Becoming another Switzerland or Singapore is the boastful fantasy of <a href="https://nepalitimes.com/editorial/politics-as-usual">incompetent serial politicians</a> who keep getting themselves elected again and again.&nbsp;
So, what has to change?&nbsp;
It has to be <a href="https://nepalitimes.com/here-now/looking-ahead-to-nepal-s-2027-elections">through elections</a>, but there is spreading distrust of the democratic system bordering on nihilism among Nepalis. The three main parties must have sensed by now that they are doomed if they do not get their act together and inject new untainted blood into tickets in 2027.&nbsp;
One election will not clean up the muck that has accumulated over the past 35 years, but we have to start with the next one. Politics cannot be business as usual any more, voters are fed up with what is on offer.&nbsp;
Over <a href="https://nepalitimes.com/news/push-factors-driving-nepalis-out">one-third of young Nepalis are not even in Nepal</a>, and they are not allowed to cast their ballots. But we saw in 2022 that the diaspora can have an impact on how their folks vote back home, and this trend is bound to increase in 2027. It would finally break the vote banks on which the established parties have relied on to perpetuate misrule.
Nepal needs solutions urgently to address snowballing crises on multiple fronts: social inequity, joblessness and low purchasing power, failing agriculture, breakdown of services, a pandemic of corruption feeding mal-development, low capital formation, environmental woes, and to top it all off — a runaway climate emergency.&nbsp;
Yet, there are bright spots, many of which happened despite political instability: falling poverty rate, improved health and education status, increase in forest cover, conservation successes, growth in hydropower.&nbsp;
Just imagine how much further ahead Nepal would be if it was not plagued with chronic mismanagement, <a href="https://nepalitimes.com/opinion/higher-corruption-in-high-places">corruption and conflict</a>.
It is because of these modest gains that <a href="https://nepalitimes.com/news/not-poor-but-not-rich">Nepal will graduate</a> from a ‘least-developed’ to a ‘developing country’ in November 2026, and transition to middle-income status by 2030 — even though it still has an annual per capita income below the $1,306 threshold.
The driving force for this growth comes almost entirely from remittances which make up 26% of the GDP — the third highest in the world. Inflows officially hit $12.54 billion last year, and nearly 65% of households depend on money <a href="https://nepalitimes.com/editorial/the-new-equaliser">family members send home</a>, spending most of it on basic needs.
A recent discussion at the Institute for Integrated Development Studies (IIDS) titled Diaspora Dialogue: Innovation, Identity and Global Influence looked at leveraging the 4 million Nepalis who live and work abroad to spur investment and growth.
IIDS has been involved since 1979 in policy advocacy to propose sustainable solutions to governments under at least four different political systems. The fact that we are in the state we are in now must mean that not many of the policy priorities the IIDS put forward in the past 40 years have been properly implemented.&nbsp;
For decades, we’ve heard that Nepal’s path to economic growth lies in <a href="https://nepalitimes.com/opinion/people-power/nepal-can-level-up-tourism-with-electricity">hydropower and tourism</a>, but that narrative has to change, noted IIDS Executive Director Biswash Gauchan.&nbsp;
“Forget falling water, forest and forex,” he said. “Nepal has to move to a knowledge economy, boost investment and look beyond our neighbours to the diaspora.”&nbsp;
There is an artificial bubble in real estate and banking due to remittances. Even if Nepal gets 3 million tourists a year and exports most its hydropower it will not be enough to take the annual per capita income to $6,000 by 2050.
A knowledge economy means thinking beyond enrolment rates and basic literacy to quality education relevant to the <a href="https://nepalitimes.com/opinion/investing-in-people">human resources the country needs</a>. This will ensure jobs at home in import-substitution agriculture, value-added manufacturing and export of services.
And that is where global Nepalis come in. Connectivity means the end of geography, and diaspora talent and capital can be harnessed for investment and involvement in innovation to take Nepal into a <a href="https://nepalitimes.com/here-now/smart-ageing-is-nepal-s-next-frontier">digital future</a>.&nbsp;
This needs a paradigm shift away from a rent-seeking state to a ‘whole-of-government’ strategy that can only come from a new crop of competent technocrats with integrity and vision to seize the moment. They have to see migration not as 'brain drain' but as 'brain circulation'.
Those Nepalis exist. In Nepal and all over the world. Swaziland’s anuual per capita income is $4,000 — think we can do it <a href="https://nepalitimes.com/here-now/nepal-in-2050-wk6r5r1j">by 2050</a>?

marxism

How not to be a Sri Lanka

Nepal’s elusive ‘Great Transformation’

30 years after Baby Arun

The flower guy

Big, beautiful Bills

Size does not matter